ETHICS & SOCIAL

RESPONSIBILITY

ETHICS: a set or moral principles or values that

govern behavior.

Businesses develop ethics to help them determine

how to behave. These ethics reflect a company’s

beliefs about what actions are appropriate and fair

among people.

ETHICS IN BUSINESS

A document that outlines the

principles of conduct to be used in

making decisions within the

organization.

CODE OF ETHICS

Honesty

Adherence to the law

Product safety and quality

Health and safety in the workplace

Conflicts of interest

Employment practice

Selling and marketing practices

Financial reporting

Pricing, billing and contracting

CONTENT OF

ETHICAL CODES– Trading in securities/using

confidential info

– Acquiring and using info

about competitors

– Security

– Payments to obtain business

– Political activities

– Protection of the

Environment

Merely establishing a code of ethics does not prevent unethical behavior.

To be effective, codes of ethics must be enforced.

•It is very important that companies discipline employees who violate their

codes of ethics.

CONTENT OF

ETHICAL CODES

Businesspeople regularly make ethical decisions. These decisions have very important consequences

for both individuals and their companies.

Behaving unethically can hurt, or even end, a businessperson’s career.

It can cause a business to lose millions of dollars or even go out of business!

Behaving ethically helps employees gain the trust of the people with whom they work or even their

customers, suppliers, etc.

BEHAVING

ETHICALLY

Some situations that cause a break in the code of ethics

when dealing with honesty is:

•Employee Theft

•Lying about Hours Worked

•Falsifying Records

BEHAVING

ETHICALLY

Ethical Dilemmas: are situations which the ethical

course of action is not clear.

Ethical Dilemmas arise regularly in the business

world.

DEALING WITH

ETHICAL DILEMMAS

A way to approach ethical dilemma is to answer a series of questions like these:

1. Have you defined the problem accurately?

2. How would you define the problem if you stood on the other side of the fence?

3. Whom could your decision or action injure? Can you discuss the problem with the affected parties before you make

your decision?

4. Are you confident that your position will be as valid over a long period of time as it seems now?

5. Could you disclose without qualm your decision or action to your boss, your CEO, the board of directors, your family,

and society as a whole?

DEALING WITH ETHICAL

DILEMMAS

THE SHERMAN ACT

•The purpose of the law is to ensure that companies remain able to

compete fairly.

THE CLAYTON ACT of 1914

•Makes it illegal to charge different prices to different wholesale

customers.

•It also bans the practice of requiring a customer to purchase a second

good.

THE WHEELER ACT of 1938

•Bans unfair or deceptive acts or practices, including false advertising.

•Business must inform consumers of possible negative consequences of

using their products

LAWS RELATING TO ETHICS IN BUSINESS

Several laws protect consumers in the United States against

unethical and unsafe business practices.

•FEDERAL FOOD, DRUG, and COSMETIC ACT

Bans the sale of impure, improperly labeled, falsely guaranteed, and unhealthful

foods, drugs, and cosmetics

•CONSUMER PRODUCT SAFETY COMMISSION

Was established in 1972

Establishes minimum product safety standards on consumer products.

NIKE in 1999 the CPSC recalled a quarter of a million Nike Water Bottles because the cap

was not attached properly, possibly causing them to choke.

•LOANS

A series of laws protects U.S. consumers against unfair lending practices.

Under the Truth in Lending Act of 1968, creditors are required to let consumers know how much they are

paying in finance charges and interest.

CONSUMER PROTECTION

Since the late 1960s environmental protection has been an

important social and economic issue in the United States. This

concern has been reflected in the man laws designed to protect

the environment:

•THE NATIONAL ENVIRONMENTAL POLICY ACT OF 1969

Created the Environmental Protection Agency (EPA) whose mission is to protect human

health and safeguard the air, water, and land.

•CLEAN AIR ACT of 1970

Regulates air emissions.

•TOXIC SUBSTANCES CONTOL ACT of 1976

Enacted to give the EPA the ability to track the 75,000 industrial chemicals currently

produced in or imported into the US

•CLEAN WATER ACT of 1977

Gives the EPA the authority to set standards on the type and quantity of pollutants that

industries can put into bodies of water.

ENVIRONMENTAL PROTECTION

Standards of business ethics differ around the world.

This means that business practices that are acceptable in one country may be

considered unethical in others.

Business managers working in other countries must be aware of these

different ethical standards.

ETHICAL STANDARDS &

CULTURE

Corporate Gift Giving

•Depends on culture, country, etc.

•US—government officials are not allowed to accept

expensive gifts from businesses

Intellectual Property

•Refers to ownership of ideas, such as inventions,

books, movies, and computer programs.

ETHICAL STANDARDS &

CULTURE

Social Responsibility: Refers to the obligation

that individuals or businesses have to help

solve social problems.

SOCIAL

RESPONSIBILITY

Views toward social responsibility evolved through

three distinct schools of thought:

•Profit maximization

In the 19th century and early 20th century businesses believed their role was

simply to maximize profit

•Trusteeship management

In the 1920s and 1930s businesses recognized they had obligations to their

employees, their customers and their creditors.

•Social involvement

During the 1960s they began to believe that corporations should use their

influence and financial resources to address social problems.

SOCIAL RESPONSIBILITY

Include a company’s employees, customers,

supplier and the community!

STAKEHOLDERS

To measure how socially responsible a

company is, some managers perform social

audits.

Social Audit: is a review of a business’s social

responsiveness

•Our country measures through the following

three ways.

MEASURING SOCIAL

RESPONSIBILITY

Efforts to improve human welfare

Companies grant paid time off to employees to

participate in charitable events

•Donate blood

•Food and clothing drives

•United Way

Matching Funds

PHILANTHROPY &

VOLUNTEERISM

Limiting the damage their operations

cause to the environment

Establishing policies that reduce

pollution

Encourage car pooling

Using biodegradable products and

refillable containers

ENVIRONMENTAL

AWARENESS

One of the most important ways a company can

demonstrate its sense of social responsibility is

through

Maintain ethnically diverse workforces that reflect

the societies in which they operate

Adopt polices that contribute to the quality of life

of their workers

•Flexible work hours

•Onsite daycare

SENSITIVITY TO DIVERSITY

& QUALITY OF WORK LIFE